Primary Market versus Secondary Market


by Anders Ong

There are two main market in properties transaction, which comprise of:-

  • Primary Market – Direct purchase of a new property from developers. Examples are under construction properties or projects off the plan and unsold units from the developers.
  • Secondary Market – Direct purchase of properties from primary buyers or buying it from the auction markets.

Differences between Primary & Secondary Market.

Differences Primary Market Secondary Market
First Owner Property Developer House Purchaser/Owner
Booking of Property Minimal (RM1K-10K) 2%-3% Earnest Deposit
Down payment Less than 10% as normally developer give rebates & discounts Balance 10% to be paid and depends on negotiations
SPA Legal Fees Most developers absorb the legal fees and stamp fees Buyer have to pay the legal fees and stamp fees
Loan Legal Fees Most developers absorb the legal fees and stamp fees Buyer have to pay the legal fees and stamp fees
Memorandum of Transfer Some developer absorb the legal fees and stamp fees Buyer have to pay the legal fees and stamp fees
End Financier Only panel bank can process the mortgage loan or after completion only every bank process the mortgage loan. It is a completed project so all bank can process the mortgage loan.
Property Valuation No valuation made and no valuation fees incurred. Property will be sold based on the price set by the developer initially unless it is almost completed. Valuation fees to be paid by the buyer and a valuation report will be provided. Extra cash will be needed if the valuation is lower than the selling price.
Sales & Purchase Agreement Following the Schedule H (Building or land intended for subdivision into parcels) for residential development. Residential property not following the standard Schedule H. The agreement can be altered based on negotiations.
House Design Latest Trend Old Trend
Price Setting Mostly pricier and fixed based on future value Negotiable and based on current market value
Main Investment Segment Capital appreciation Cash flow
Completion 2 – 4 years to get keys 3 – 6 months to get keys
Furnishing and Renovation Bare unit, partial furnish and fully furnish. The renovation is either fixed by the developer interior designer or we can choose our own preference. Bare unit, partial furnish and fully furnish. The renovation is fixed by the previous owner design.
Rental income Delayed until completion and some developers provide Guaranteed Rental Return once vacant possession. Immediate can be rented out after keys collection and depends on market demand.
Maintenance and Repair Minimal as the property is new and usually come with defect liability period by the developer. It can be minimal to major as some property are well taken care of by previous owner and some are left without maintenance.
Defect Liability 2 – 3 years Nil
Selection Flexibility Can choose units preferred such as preferred view and unit numbers Depends on availability of seller units and not much choice in term of unit selection
Instalment To Bank Progressive interest payable only during construction period. But can opt for full instalment from the bank Direct full instalment payment to the bank
House Delivery Some handover are delayed and compensated with liquidated ascertained damage (LAD) After full payment of cash or full release by bank to the owner and settlement of the utilities bill incurred
Selling of Property Cannot be sold during construction or it can be done with developer consent during construction which is usually rejected. Cannot be sold during transaction period until full release of payment.

Anders Ong – Young Property Investor, Writer and Enthusiast of Real Estate. 

  1. Oh nice
    July 29th, 2018 at 17:35 | #1

    me think the biggest difference is immediate occupancy (almost) vs future occupancy..

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